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Election 2010: Beyond the results

When Target gave money in July to a pro-business group in Minnesota, the company thought it was helping its bottom line by backing candidates in its home state who support lower taxes. Instead, the retailer has found itself in a fight with liberal and gay rights groups that has escalated into calls for a nationwide boycott and protests at the company's headquarters and stores.

The problem: Target's $100,000 helped pay for TV ads supporting the gubernatorial campaign of Republican state Rep. Tom Emmer, who thinks Minnesota's corporate taxes should be lower. As it turns out, he also wants to ban same-sex marriage.

It was an embarrassing stumble for a company that has carefully cultivated an image of urbanity and hipness -- and that's earned goodwill with the gay community. The company offers benefits to domestic partners and receives sterling marks from liberal groups for its tolerance of gays. Target has even been an annual sponsor of the Twin Cities Gay Pride Festival.

The imbroglio illustrates the pitfalls facing companies after a game-changing Supreme Court decision in January allowing them to contribute unlimited money for political activities -- often with complete anonymity. But corporate donations can still come to light and, when they do, cause unexpected heartburn for public relations.

Lawrence M. Noble, a campaign-finance law expert at the law firm of Skadden Arps, said Target's troubles will be watched closely by other major corporations -- especially those with a high public profile -- who are now likely to think twice before giving corporate money to groups that may later prove controversial. "You run the real risk of backlash," he said.

It's unclear whether Target knew that the pro-business group, MN Forward, would be required under state law to disclose its contributors or that it would support Emmer as a candidate. Target declined to publicly discuss the matter in detail.

But with protests mounting in recent weeks, Target's chief executive, Gregg Steinhafel, wrote a letter of apology to employees Aug. 5, explaining that the company's political donation had been a misguided effort to foster economic growth.

"While I firmly believe that a business climate conducive to growth is critical to our future, I realize our decision affected many of you in a way I did not anticipate, and for that I am genuinely sorry," Steinhafel wrote. He continued, "The diversity of our team is an important aspect of our unique culture and our success as a company, and we did not mean to disappoint you, our team or our valued guests." He added that the retailer would more closely review any future political contributions.

The controversy began in late July, soon after MN Forward disclosed some contributors in a filing it was required to make with the state. Documents showed Target gave MN Forward $100,000 in cash and $50,000 worth of help establishing the group's brand.

The angry response was immediate. MoveOn.org e-mailed members, asking them to sign a petition promising to boycott Target unless the company pledged to stop contributing money for political activities.

Advocates object

Steinhafel's apology didn't quell the growing discontent. The day after his letter was released, MoveOn.org delivered its boycott petition to Target's headquarters and organized protests at Target stores across the country.

Meanwhile, Human Rights Campaign, which advocates for gay rights, said it opened talks with Target to see whether it would donate $150,000 to a candidate that supports gay marriage. HRC said Monday those negotiations had broken down.